News

H.Y. Louie closes wholesale division

Monday, February 01, 2016

After 110 years, H.Y. Louie is closing its wholesale
business and will instead source grocery products from the Overwaitea Food
Group (OFG). The company’s warehousing and distribution operations will close
by July 22, 2016.

“The grocery industry is undergoing significant change. As a
result we have been adjusting our business model to remain competitive within
our retail brands,” Gary Sorenson, executive vice-president and chief operating
officer, said in a memo to staff. “The
efficiencies of continuing to operate a small wholesale operation like this are
non-existent.”

OFG president Darrell Jones told Business in Vancouver that his
company has entered an agreement to supply all of H.Y. Louie's IGA stores with
dry goods, which comprise about 40 per cent of the banner’s grocery store sales.

“We just opened a new warehouse in Edmonton both for fresh and
for [dry goods,]” Jones said. “We have a good amount of capacity in Western
Canada to distribute more groceries and do it more efficiently. So, when the
opportunity came up to partner with the folks at H.Y. Louie and support them,
we thought it would be a good fit.”

OFG may also deliver dry goods to H.Y. Louie’s former
wholesale customers, which include about a dozen smaller stores. "Our
customers have been notified that we're out of the wholesale business and it is
up to them to decide what to do," said Mark McCurdy, H.Y. Louie’s general
manager of marketing and brand development.

H.Y. Louie senior management has recently addressed under-producing
assets and operations with the closure of franchise stores and Cash & Carry
stores, as well as the sale of four corporate stores. All of these changes had
an impact on the supply side of the business, the company memo said.

H.Y. Louie will continue to operate 28 IGA stores and has
plans to significantly increase the number of stores in its new two-store Fresh
St. Market grocery store chain, McCurdy said.

H.Y. Louie was founded in 1903 when Hok Yat (H.Y.) Louie
opened his first grocery store. Soon afterward, he launched a wholesale
division. The Louie family, which continues to own the company, also owns the
London Drugs chain, which has its own wholesale supply system and is operated
separately.